Month: March 2014

Web-blocking and copyright protection: the European court sets the limits

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 Court of Justice of the European Union has finally determined the limits under which national courts can require ISPs (Internet access providers) to block access to websites in order to prevent or impede copyright infringements. The decision of the Court (Judgment in Case C‑314/12 UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbHis of February 27, 2014) is not surprising, because the relevant European directives allow implicitly such kind of national interventions in order to repress piracy. However, today’s decision is very important because for the first time the European court has set forth some mandatory principles that national courts must comply with when ordering ISPs to block access to websites for copyright protection purposes.

According to the European Court, when national courts impose a web-blocking measure against an ISP for copyright reasons, they must guarantee a fair balance balance between the protection of copyright, on one side, and other rights which are protected under European law, such as:

1. the (ISP’s) freedom to conduct business and;

2. the fundamental rights of citizens.

The freedom to conduct business

In this context, freedom to conduct business means whether in ISP should support costs and charge of any kind in order to help right-holders to achieve their objective (namely the “isolation” of the illicit content). The question arise because ISP are mere intermediaries and, as recognized by the court itself, are not liable for the illicit behaviors of pirates. Why and how much should an ISP pay for that? The European court already addressed this problem in a previous cases (particularly the Sabam-Scarlet decision concerning Internet filtering) ruling – in general terms – that ISPs are not working for the benefit of right-holders, they  run a different business. Therefore, they should not be required to carry on expensive investments and activity on behalf of third parties.

In the present case of web-blocking, the European court says that the ISP can choose to put in place measures which are best adapted to the resources and abilities available to him and which are compatible with the other obligations and challenges which he will encounter in the exercise of his activity. In order words, the ISP cannot be obliged to bear significant costs, or deploy investments having considerable impact on the organisation of his activities or require difficult and complex technical solutions. It will be for the national judge to examine whether the involvement of the ISP is, in terms of costs and assistance, justified and proportionated.

In addition, the ISP must have the possibility to show and prove that he has taken all reasonable measures in order to avoid liability. In other words, ISPs cannot be deemed responsible if the blocking measures are circumvented and users continue to access pirated content through the blocked website, since technology provides several instruments for this purpose. A national judge cannot therefore pretend that an ISP guarantees that a blocking measure will be effective: “ad impossibilia nemo tenetur”. According to European Court “That possibility of exoneration clearly has the effect that the addressee of the injunction will not be required to make unbearable sacrifices, which seems justified in particular in the light of the fact that he is not the author of the infringement of the fundamental right of intellectual property which has led to the adoption of the injunction”.

The above limitation is particularly relevant in those countries where the judges require the iSP to have an “active role” in blocking website, for instance by monitoring whether the illicit it website migrates in order to escape the blocking measures.

The fundamental rights

In the mentioned Sabam-Scarlet case, the European court had stated that piracy repression in the Internet must be balanced with fundamental rights of individuals, such as piracy, freedom to speech, freedom to information ecc.

In the present case, the European court recalls that web-blocking measures do not have to “unnecessarily deprive” (sic) users of the possibility of lawfully accessing the information available in the Internet. In other words, such measures must be “strictly targeted”, in the sense that they must serve to stop copyright infringement but without thereby affecting internet users who are using the provider’s services in order to lawfully access information. Otherwise, according to the court “the [ISP]’s interference in the freedom of information of those users would be unjustified in the light of the objective pursued“.

In theory, this principle is clear and acceptable when we are dealing with a website or a platform which is entirely and maliciously intended to commercialized pirated content. However, the reality look a bit different, because illicit content is frequently available on websites and social platforms which users access for licit purposes. In this respect, the  European court seems superficial about the social and business reality, and unaware of the technological implications of its decision.

Blocking the access to a specific content or page, in the context of a larger website or platform, it is no so technically easy. The capacity to target a specific content is normal in the case of content removal, i.e. Notice and Take Down, when the removal is carried on by the social platform or by the manager of the website. By contrast, a selective web-block is not easy from the point of view of Internet access: in this case, the problem is blocking the Internet traffic to a specific page/URL or whatever (which will continue to exist, since it is not removed). Some ISP could say that this operation is not possible from technological point of view or it is too costly, and in such a case they would claim exoneration (as seen above). Thus, this is a bug of the European sentence which will cause controversies in front of national judges and maybe a new preliminary ruling by the same court of Luxembourg.

Is web-blocking an effective remedy?

Interestingly, the European court has recognized the web-blocking is not an effective remedy in order to “isolate” illicit websites: “it is possible that a means of putting a complete end to the infringements of the intellectual property right does not exist or is not in practice achievable, as a result of which some measures taken might be capable of being circumvented in one way or another“. However, the court finds that even though the measures taken when implementing an injunction are not capable of leading, in some circumstances, to a complete cessation of the infringements of the intellectual property right, they cannot however be considered to be incompatible with EU law and therefore can be adopted in any case.

Nevertheless, the above can be claimed by ISP to avoid liability in case the infringements continue.

Conclusions

The present European decision will be perceived in different ways by the industry. Rights-holders will welcome the confirmation that web-blocking for copyright protection is possible under European law, but they will be less happy that a series of condition have been fixed. The European court leaves some discretion to national courts about the implementation in the concete circumstances. This means that in the European States where web-blocking is already largely applied (Italy for instance), this European decision may create a reason to moderate such practice. Conversely, in countries where web-blocking is not familiar, such as Germany and Austria for instance, this decision may encourage national court to start to intervene upon request of right holders.

Regarding the facts: the litigation arose in Austria where some rightholders, Constantin Film Verleih Wega Filmproduktionsgesellschaft, became aware that their films could be viewed or even downloaded from the website “kino.to”  without their consent. At the request of those two companies, the Austrian courts prohibited UPC Telekabel Wien, an Austrian ISP from providing its customers with access to that site. UPC Telekabel appealed the injunction.

 

Lights and darkness of the (EP) net neutrality reform

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Today the ITRE committee of the European Parliament approved a draft reform of Net Neutrality supported by Pilar del Castillo, a Spanish rapporteur (EPP) who is in charge of the Connected Continent Proposal.

The approved draft is more advanced than the proposal tabled by Commissioner Kroes in September 2013, a proposal which instead would have created a catastrophe for the Internet environment and the rights of citizens. However, even the proposal of Del Castillo presents numerous and relevant problems which are of concern for libertarians, pro-citizens and pro-competition stakeholders. Let’s try to enumerate the most important ones:

– discrimination: telcos are still able to discriminate online services by simply charging or differentiating the price of the Internet connectivity with the scope to favor a servicer over another. The problem already arose with the initial proposal of Kroes and specifically with art. 23(5) of the proposed regulation, and it has not been addressed yet. Thus, the  current version of the provision still empowers an ISP to establish a 2-tier Internet environment: a discounted Tier-1 Internet with selected online service, and a more expensive Tier-2 with all the rest. In order to avoid this problem, it should be clearly stated in the draft regulation that ISPs cannot differentiate the price of Internet connectivity unless there are objective justifications (i.e. quality, not just commercial deals between the ISP and a few online providers). Such an amendment had been proposed by Amelia Andersdotter, a Swedish MEP (Pirate Party), however it was not retained. A similar solution is currently envisaged by the Dutch net neutrality legislation.

– open character of the Internet: it is not sufficient for a legislator to say that we want an Open Internet, it should be clearly stated in writing what “Open Internet” really means. An amendment of Mrs. Trautman, rapporteur for S&D, tried to link some features of an Open Internet (enumerated in a recital) with the definition of Internet Access present in the draft regulation. The amendment was rejected and in any case it was not enough.  An “Open Internet” means that ISP cannot control, in any way, which and how their subscribers select online services in the Net. Therefore, not only blocking, throttling and bandwidth limitation should be forbidden: the principle must be more far-reaching and should cover any potential instrument which ISP can use to control the choices of the users (including any kind of price discrimination, as mentioned above). To achieve this scope, a clear legal clause, not a simple recital, should be inserted in the proposed regulation.

– what specialized services are: the current approved definition is an improvement with respect to the Kroes’ one, however it still leave the rooms for ISP to market as “specialized services” product and services which are normally accessible in the open Internet. This capability could allow a dominant ISP to create a 2-tier Internet. An amendment of Mrs. Trautman likely aimed at resolving this issue, however it was not sufficiently explained in the recitals.

Marjette Schaake, a Dutch liberal MEP very active in Internet matters, claimed that the current draft is very dangerous.

The draft approved today will now be submitted to the plenary session scheduled in Strasbourg  for April 3rd, 2014 and then be examined by the Council. However, the grey areas of the draft may create the basis for a rejection by the general assembly. Approving a draft which is still potentially dangerous for NN could be a risk for many MEPS which will be soon into elections (May 2014).

The controversial truth about the end of international roaming

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(See Update at the bottom of then post)

There is lot of excitation about the fact the roaming tariffs should disappear soon in the European Union, with lots of benefits for consumers in terms of easiness of travels and saving. An important – however non final – decision will be taken by the European Parliament (ITRE Committee) on March 18, 2014. Before starting to clap, it’s worth to remind how the situation really is.

The initial proposal by the European Commission

The matter started with Commissioner Neelie Kroes launching in September 2013 the so-called Connected Continent proposal, which included a revision of the current regulatory framework of international roaming (basically, EC Regulation 531/2012).  The proposal basically provides for some incentives to mobile operators to make “roam like at home offers”, i.e. tariffs plan without differentiating domestic and roaming retail prices. The communication department of cabinet Kroes have been announcing this reform “as the end of international roaming”, but the reality looks a bit different: whether or not roaming will end, this would be a choice of mobile operators, it depends whether the incentive provided by the Commission works or not; however, even if it works, there would be lot of exceptions in terms of timing (entry into force of the reform), territorial coverage (which countries to be covered) and quantity (only a portion of traffic would be covered by the reform: so-called fair usage). In other words, the real end of international roaming is much more far than expected according to the Commission’s schedule. In addition, the reform designed by Commissioner Kroes is based on a system of alliances which would reinforce the position of larger groups (such as Vodafone, Telefonica, Deutsche Telekom and Orange), while kicking out of the market smaller mobile companies (including MVNO). This is quite surprising, because the roaming issue exists because of historical agreements between dominant mobile operators. Consolidating the market position of the same companies which created the problem should not be the best solution, however Commissioner Kroes has other visions. Apparently, in the Netherlands they fight alcolism by protecting the alcool suppliers.

The counter proposal by the Parliament

The European Parliament never liked the Connected Continent proposal for a variety of reasons (timing, complexity, lack of a positive impact assesment, institutional jalousies, ecc). However, it was clear for many MEPs that the International Roaming story was a good thing to sell to electors in light of the incoming elections. Therefore, the counter proposal coming from the competent committe, the ITRE one, has been much more aggressive than the proposal of Kroes: retail roaming should finish at a certain date, irrespective of the conveniences of  mobile operators. At the end, the chosen deadline for the end of international roaming was fixed for December 15, 2015.

Will mobile tariffs change or not? Where is the problem with the Parliament’s position?

The ITRE Committee did not take on on board the issue of wholessale roaming tariffs (i.e. the price that mobile operators have to pay abroad when accessing a foreign network in order to provide roaming to its travelling customers). As long as such wholesale price remains high (as it is presently), only a few operators will be effectively able to provide roaming like at home thanks to historical bilateral agreements. In other words, 2 operators reciprocally decide the access price on their respective networks, however this will not apply to third operator. Thus, the latter will not be able to compete if such access price is so high to make impossible to provide a retail service, whose tariff should entail such costs. As a consequence, should the text be approved in its current form, it is likely to lead to the disappearance of dynamic smaller players who serve as a force for competition and who are committed to deliver roam-like-at-home packages to all European consumers.  By contrast, the consolidation of the market around few dominant players – the same which historically created the high roaming charges – will likely bring to a rise of tariffs. In other words: consumers will not pay roaming any longer, however this advantage will be adverselly compensated by more expensive mobile tariffs and less choice.

It is interesting to see that the European Commission addressed this problem with its first Connected Continent proposal in July 2013, which was however modified after fierce lobbying by dominant mobile operators.

The problem connected with this problem has been outlighted by a coalition of competitive mobile and MVNO operators, named Roaming Coalition, see here the press release.

 What are the next steps?

After the ITRE vote,  a final decision should be taken by the European Parliament in the plenary session scheduled for April 2nd, 2014 (if not, the entire reform risks to fail). Then, the Parliament’s position should be approved by the Council, which will likely submit some amendments. Therefore, a second plenary votation from the Parliament will be necessary, likely in October 2014. In other words, this reform will came into force only on the second part of the year, provided that the new Parliament (elected with the election of May 2014) accepts to acknowledge the work done until now by the previous assembly.

UPDATE 18 March, 2014: the ITRE committee approved the roaming reform. However, the rapporteur Del Castillo was not granted mandate to negotiate with the Council. This is a sign that some games are still open in the EP

 

The European Parliament and the big game of the Net Neutrality

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On March 18, 2014 the European Parliament (ITRE Committee) will take an important decision in the matter of Net Neutrality. Or maybe not.

Currently, 2 set of compromise amendments have been tabled, one from the main rapporteur Mrs. Pilar del Castillo (Spain, PPE), the other from shadow rapporteur Mrs. Catherine Trautmann (France, S&D). The difference between the 2 compromise amendments is not huge: the drafts are quite similar and show a more citizens-friendly approach* with respect to the initial proposal of the European Commission, while the Trautmann’s version include an explicit reference to the principle of net neutrality in the legal text – a reference that, in legal terms, should be better specified, otherwise it may be considered just as a symbolic amendment:

(14) “internet access service” means a publicly available electronic communications service that provides connectivity to the internet in accordance with the principle of net neutrality, and thereby connectivity between virtually all end points of the internet, irrespective of the network technologies or terminal equipment used;

Trautmann also proposes a technical specification in order to distinguish specialized services from best effort Internet. The intention is to reinforce the pro-citizens* flavour of the Net Neutrality reform, although the exact technical implications of this amendment should be further analysed:

(15) “specialised service” means an electronic communications service optimised for specific content, applications or services, or a combination thereof, provided over logically distinct capacity and relying on strict admission control from end to end. It  is not marketed or usable as a substitute for internet access service; its application layer is not functionally identical to services and applications available over the public internet access service;

With so minimal differences, one would wonder why the ITRE Committee could not find an agreement on a common draft. It is therefore possible that this confrontation hides instead different political issues. A possible explanation could be that both rapporteurs, Del Castillo and Trautman, are fighting to be recognized as the “master” of the European Net Neutrality reform. This result would be quite relevant in the respective political constituencies in light of the incoming European elections in May 2014.

No doubt that Mrs. Del Castillo has made a Copernican overturn in the matter of Net Neutrality: while her initial report in November 2013 was basically endorsing the Commission’s proposal, and so reflecting the wishes of big telcos, the current position is more citizens friendly*. This changement of approach made likely upset European and US big dominant operators, such as the members of ETNO and GSMA, which issued an incredibile PR on February 24, 2014 that, according to the admission of various MEPs, strongly undermined the credibility of such associations when discussing NN in Brussels. However, even the NN reform of Pilar del Castillo appears to cautious with regard relevant issues such as the possibility for telcos to discriminate online services and therefore it cannot be seen a sufficiently good proposal for libertarians and citizens’ rights associations.

Also Mrs. Trautmann  made an important move in the direction of a pro-citizens* Net Neutrality reform and she appear more incisive than Pilar del Castillo. In addition, the fact that this well-respected, and telecom experienced, MEP will have to fight a lot in her country to be re-elected (apparently she will not be the first candidate in her French constituency) may explain the decision to keep an high level of visibility in this debate.

The liberals (ALDE) are likely supporting the substance of the ITRE compromise, although we do not know whether they will go for Del Castillo’s or Trautmann’s version.

Then, the Greens and the Pirates: they should be the moral winners of this game, because the most critical NN provisions proposed by Commissioner Kroes in September 2013 have been completely dismanteled. However, rumours say that are not happy with the current draft and would prefer to stop the negotiations and postpone everything to the next elected Parliament. This move could be a mistake, however, because the new Parliament, without the pressure of soon incoming elections, will be less inclined to embrace pro-citizens Net Neutrality positions.

Finally, the industry: ETNO and GSMA would like the entire reform (i.e. the whole Connected Continet Proposal of Commissioner Kroes) to collapse. The approach is not only due the current status of the Net Neutrality reform in the Connected Continent package: the real problem for them is the roaming reform foreseen therein, since the ITRE Committee decided to go well beyond the European Commission’s proposal and to set the end of roaming surcharges by 2015. A perspective that most all mobile network operators, with the sole exceptions of MVNOs, “would like to avoid like the pest”.

PS: The ITRE Committee should have been voting the Net Neutrality provisions, in the frame of the Connected Continent proposal, already on February 24, however the relevant MEPs decided to postpone the voting because of some irregularities in the translation documents. This postponement has put at risk the approval of the entire proposal, and the Net Neutrality reform with this, because an approval on 18 March may not be sufficient to guarantee a place in the EP plenary assembly scheduled for April (the last one for this Parliament). If the EP plenary session in April will not approve the Connected Continent proposal in first reading, the entire process will be virtually finished: “abbiamo scherzato” (it was just a joke).

* Saying that the current ITRE proposal on Net Neutrality is “pro-citizens” is just a synthetic evaluation, because there are still parts of the draft that would need to be reconsidered, for instance in the matter of data caps and price discriminations. However, there is no doubt that the current ITRE draft is more advanced with respect to the proposal tabled by Commissioner Kroes in September 2013 which, in fact, had been welcomed by dominant telcos.